Young Professionals Seminar 2015: presentation summaries

Noreena Hertz, socio-economist and author, delivered the keynote opening with her views on the complexities of this age, and the opportunities it affords. She began her presentation by saying that history is not an army on a forward march. What works today will not necessarily work tomorrow as the world is now more complex.

She highlighted her big five game changers for Europe, with the price of oil and the polarisation of politics topping her list. These were followed by the future of Greece in Europe, terrorist / political attacks on European shores (with an emphasis on the particularly damaging effects of an attack from Russia) and disruptions from technology on every industry.

How to navigate a terrain that is so complex?

Become smarter information hunter-gatherers, seek out divergent points of view, know thyself and note your emotions and how they impact your decisions, accept the inevitability of change and carve out time to think.

Russell Chaplin, CIO-Property, Aberdeen Asset Management (introduced as the "Grandfather of industry research") discussed the role of a CIO and imparted some maxims for successful long term property investment.

While only 20% of delegates thought that income accounted for 80-90% of total return for global property, Russell confirmed that it is indeed 90%. In the long term, property's return is mostly about income.

Where does most of property's total return volatility come from? The vast majority of the audience (90%) cited yield movement. While Russell agreed that yield impact is relevant in the short term, he stated that it is not important in the long term, as you cannot predict it

Henri Vuong, Director of Research and Market Information at INREV, presented early findings on an INREV study on persistent performance in non-listed European real estate funds. A common disclaimer in the investment world is that past performance is not an indicator of future outcomes. But does this hold for real estate funds?

Early results show that some funds managed to consistently repeat top quartile performance -- 5% of funds maintained a top quartile ranking over the past decade.

Persistent performance also exists over a short term time horizon. Around 40% of funds outperform for three consecutive years.

A healthy number of future top quartile funds comes from the prior periods' second, third and even fourth quartiles.

Stickiness in performance of bottom quartile funds is also found, where 45% of funds with bottom quartile ranking over three years to 2014 were also in the bottom quartile in the previous three years.

Therefore the study found that track record does indeed matter.

For full results, the Persistent Performance in Non-Listed Real Estate Funds will be released in July.

Jose Luis Pellicer, Associate Partner at Rockspring Property Investment Managers moderated a panel discussion between Marleen Bosma-Verhaegh, Senior Fund Manager Real Estate at Blue Sky Group, Dennis van Vugt, CFO/COO EMEA at CBRE Global Investors, and Jerome Berenz, Head of Investment Analytics Risk Management at Allianz Real Estate. The panelists explored the idea of whether past performance provides information about future returns.

The panel considered patterns of persistent performance in terms of approach to risk management, investment and fund manager selection and momentum strategies.

Marleen remarked that 'the key is never just look at the past, what does it mean for the future'. Dennis agreed and added that it's critical to be consistent with regards to performance.

On a similar theme, Jerome added that 'Track record is just a proof of skills, based on the circumstances at the time, but circumstances change'. He said that every time an investor is seeking a new investment, they will assess the current situation and do their due diligence.

Does size matter?

All three panelists agreed that size does matter. Size affects your liquidity, larger funds are more capable of dealing with the increasing demand of regulations, while smaller funds are better for specialised and niche markets.

How does diversity factor into your decisions?

Marleen remarked on the diversity within her own team and emphasised that they each really challenge each other. Jerome added that diversity can also come from ensuring different roles and specialisations are included in a team.

Annemarie Manning, Director Business Development at Pramerica Real Estate Investors, interviewed Richard Plummer, Chairman and founder of Rockspring Property Investment Managers on his long career in real estate, and what he looks for in young professionals to build the future.

Since Richard was a young professional, the industry has matured a lot. The two fundamental changes of his career were Margaret Thatcher, who de-regulated the financial services sector which resulted in the transformation of the industry, and the euro, which increased the scale and diversity of business dramatically.

Richard offered three pieces of advice to young professionals: (1) whenever you can, talk to expert senior professionals and learn from them; (2) don't specialise too early, and keep learning about different things until you find you path; and (3) never give up.

He ended with some wise words from his wife: winners never quit, and quitters never win.

Peter de Haas, Head of Business Development Continental Europe at Cornerstone Real Estate Advisers and Boudewijn Ruitenburg, Director Investments at OVG Investment Management, debated traditional vs. alternative sectors under the moderation of Jose Luis Pellicer, Associate Partner at Rockspring Property Investment Managers.

Ahead of the debate, delegates were split 47/53 over the resolution that alternative sectors offer better risk adjusted returns over traditional office, retail and industrial sectors.

After convincing arguments from both sides, delegates mostly stuck to their guns and the split was 49/51 after the debate.

In keeping with tradition, this year’s seminar included a hands-on workshop to brush up the skills of delegates in something that will help them throughout their career: conflict management.

Mark Dailey and Hormoz Ahmadzadeh from Modano facilitated a workshop to teach delegates about sources of conflict in the workplace and to practice their conflict management skills. Delegates began by filling in the business styles questionnaire to learn which personality type they fit into and to better understand their own preferences and emotional wiring. This was supplemented by theory on soft vs. hard power, lessons from negotiating (last year’s workshop theme), diffusing conflict via two essential power: the power of acknowledgment and the power of listening, and tips and hints.

Then it was time for delegates to put knowledge into practice. The group was divided into small groups to role play a range of conflict management scenarios, that included:

• Dealing with ad hoc requests and time pressure
• New business request to support sub-optimal process on IT project
• Understanding the business partner’s perspective
• Reconciling conflict views on accountability, responsibility and whether to escalate
• Presenting, promoting and positioning oneself for success

Each group then reported back to the larger group on what worked, what didn’t and were asked to reflect on what delegates needed to start doing, keep doing, and stop doing to resolve conflicts.

Following on from the lessons learned in the workshop, Oscar van Weerdenburg, Cross Cultural, Leadership and Negotiations Specialist at Intercultural Business Improvement closed the day with a presentation on solving conflict across cultures.

Globalisation has brought professionals in the real estate industry from across the world into cross-cultural contact on a daily basis. This requires specific competencies in order to successfully communicate and build networks, especially with regards to younger professionals working with senior professionals, and various cultural views on seniority.

Oscar posed some difficult questions to the audience to demonstrate how cultures value, for example, honouring agreements vs. understanding changing circumstances, and offered enlightening stories from his own experiences that highlighted how we can be more competent and sensitive to cultural differences.

For the first time the second day of the young professionals seminar included a tour -- delegates were introduced to two new Rotterdam landmarks: the Markthal and De Rotterdam.

Hans de Jong, Partner at Provast presented Markthal, a dramatic horseshoe-shaped building in the heart of Rotterdam that includes shopping, dining, recreation and residential uses. Controversy is at the heart of the Markthal, which took five years to construct due to the challenging horseshoe shape. The result is 8000 m2 of commercial space including a covered food market, 228 apartments, 1200 parking places and 11,000 m2 of art painted on the inner walls and ceiling of the arch – the ‘sistine chapel’ of Rotterdam.

David Gianotten, Managing Partner-Architect at OMA, presented De Rotterdam, a vertical city of three interconnected mixed-use towers next to the Erasmus bridge along the Maas river. Named after a ship that was part of the Holland America Line, the project is part of the ongoing redevelopment of the old harbor district to reactivate the area with trade, transport and leisure.

Urban density and diversity were guiding principles of the project. The definition of the building changes according to its multiple uses internally, and the towers reach 150 m with a gross floor area of approximately 162,000 m2, making it the largest building in the Netherlands.

Presentations were followed by tours of each building, and a boat trip to travel between them.

The seminar closed with a view of Rotterdam’s iconic new central train station as delegates lunched at Bar Engels before saying good bye until next year.